There is no question that Covid-19 and the related economic turmoil has put a strain on business execution. How is your business weathering the storm? Beginning in June and continuing through September 2020, SYSPRO had record sales. We didn’t get lucky, and it wasn’t a fluke. The reality was we had a management methodology in place that enabled us to roll with the punches, pivot, and persevere.
There are different management methodologies out there, and merits to each one, but a shift we put in place about a year ago — switching to a results-based management approach — was key to providing a competitive advantage, particularly in the months following the onset of the pandemic. When I joined the company, the management approach in place was activity-based management, a methodology that prioritizes managing operational activities to bolster customer value and/or organizational performance. The goal is to continuously improve activities to lessen costs and inefficiencies.
A results-based management approach, however, first defines desired results to drive business impact before defining the necessary organizational output and activities. A major tenet of results-based management hearkens back to author Stephen Covey’s second habit in The 7 Habits of Highly Effective People: Start with the end in mind. The goal is to focus on the outcome instead of the activity and then use the outcome to define the desired result measurement. Once we shifted to results-based management, it changed the way everyone on our team thought and behaved.
In hindsight, the move to results-based management was one of the best things we could have done to prepare the organization to succeed in this unpredictable and unprecedented year. While activity-based management looks back at how resources have performed to further organizational execution, I’ve found that a results-based management approach has a more forward-leaning orientation and leaves more creativity and flexibility in how to attain the desired results.
Results-based management also plays a significant role in employee engagement, which can help diminish workforce anxiety around business uncertainty. When our company shifted to results-based management, I noticed people started changing and feeling more empowered. This is imperative right now, as people are working harder and are more prone to burnout. They need an understanding of overarching business goals and the desired outcomes — and a solid game plan to guide their efforts.
There are many good results-based management information resources in existence, but below are real-world best practices I recommend that can aid companies in rolling out this management methodology:
- Rethink your business management to ensure the right key performance indicators are in place
KPIs must be tied to the correct outcome. For example, at SYSPRO, we were trying to measure results for our customer engagement. However, the measurement in use led the team to state the objective profitability. A myopic focus on cost containment can be contrary to an outcome that supports growth, which in this case was customer satisfaction. We needed to correct this misperception and realign focus on “happy customers” as the ideal outcome.
- Reach across the aisle
For those things that can’t be measured, creativity must be employed to develop ways to model performance. You cannot measure results in isolation, so it’s necessary to partner with other departments where there are shared dependencies. For example, a demand-generation team might try to measure lead costs and other lead-funnel-related activities, but without access to sales leaders, they might be mapping to the wrong financial goals and metrics.
Additionally, for teams to demonstrate clear interdependence in goals, they must use the same financial terminology and metrics. Many business functions use different metrics and measurements, but collaboration and communication are needed to bring groups together so they are all on the same page as to what success looks like.
- Measure progress between meetings to course-correct as needed
Using a continuous improvement model, you’ll need to measure results from one recurring time point to the next. The selection of the check-point interval depends on how often results change due to that specific activity. The interval could measure every five days, every two weeks, or every month, but it should align with the natural cadence of the result changes. At our company, for example, we measure sales on a daily or weekly model as opposed to customer engagement, which we measure every two weeks.
This year has been a game-changer – it’s time for a new management playbook
As we head into 2021, businesses are looking for the best approaches to help them succeed despite disruption. Ernst & Young has reported on the need to build enterprise resilience through adaptive digital enterprises.
Leaders can’t control or predict the future, but they can devise the means to manage it. Now is a great time to shift to results-based management to help navigate the “new normal” in business, lead with vision and purpose, and gain the agility to adapt to what’s next.
This article was originally published by Forbes Business Council.